Aviation

Mark Reckless Excerpts

Wednesday 4th July 2012 Westminster Hall

[Mark Reckless (Rochester and Strood) (Con)]

It is a pleasure to serve under your chairmanship, Mr Dobbin, and to have the Minister respond to the debate.

My interest in airports first came about because, at a time when many boys want to be train drivers, my younger brother had an ambition to be an airport manager. Consequently, whenever we went on holiday, my indulgent parents would take us to the airport four or five hours before we needed to be there, and my brother would go around and catalogue the catering outlets and investigate the cleaning rosters. I was delighted, a few years later, when he decided that he actually wanted to be a doctor.

As an economist, I worked for a short period on airline alliances, but my most significant involvement with aviation came 10 years ago when, following a leak in the Financial Times a few months earlier, the then Labour Government published the “South East and East of England Regional Air Services Study”—SERAS—which proposed an airport twice the size of Heathrow at a location it described as Cliffe, in the constituency I now represent. Then as now, many felt that that was a stalking horse to make airport expansion elsewhere seem more attractive by comparison.

Our first response was to look at that airport study, which we noted excluded any consideration of Gatwick expansion, on the basis that there was a planning agreement, and it looked no further at that idea at all. I was sort of blooded on that issue when I first asked whether that decision was perhaps irrational and something that would be questioned by the courts. Initially, a judicial review was proposed, which ultimately led to the Labour Government being forced to consider the case for a second runway at Gatwick, even though they had previously decided against it.

The debate that took place showed that an estuary airport would be environmentally devastating, and that the economics simply did not add up. I and many others were delighted to campaign with the Royal Society for the Protection of Birds, the Friends of North Kent Marshes, and many others who made the case that having a huge airport in the middle of Europe’s leading wetland landscape, with its millions of birds, was probably not a good idea.

The assumption by some that no people live in that area and that there would be no opposition was put paid to by more than 20,000 people who live on the broader Hoo peninsula, and who would suffer egregiously from such an airport. In addition, large numbers of people live on both sides of the estuary, and any flights taking off in a westerly direction would create new flight paths over heavily populated areas of London. The idea that such an airport would somehow be a problem-free solution that people would not complain about is, to coin a phrase, for the birds.

[Jackie Doyle-Price (Thurrock) (Con)]

To follow on from that, one point made by advocates of the estuary solution is that the area is crying out for new jobs. Does my hon. Friend agree that that ignores the economic growth that is already happening, particularly in south Essex, with the expansion of the port? That is the future of the estuary—ports, not airports.

[Mark Reckless]

My hon. Friend makes a good point, and I congratulate her on her work in campaigning for economic development in her area. The fundamental point is that although jobs might be created—I do not deny that there would be a lot of jobs; perhaps 200,000, as some estimates suggest—they would come 10, 15 or 20 years from now, and would be almost entirely taken by a vast migration of people who would be forced to uproot themselves, perhaps from around Heathrow, and move to a new area. In terms of Government engineering, I cannot see the case for that in a free society.

[Tracey Crouch (Chatham and Aylesford) (Con)]

I congratulate my hon. Friend on securing this important debate. Has he seen the report issued by the South East local enterprise partnership, which states that if we allowed our existing airports to expand, we could increase the number of jobs by about 100,000? That would generate in excess of £4 billion per annum.

[Mark Reckless]

Yes, I have seen that report, and I have a copy with me. Indeed, I encouraged Medway council, and through it the local enterprise partnership, to commission that excellent study. My hon. Friend and neighbour is right, and I will draw significantly on the analysis in that paper during my speech.

As well as the environmental issues, there is a knock-down argument against the Thames estuary airport: it is vastly more expensive to build a new airport than to expand existing provision. Recently, some of those issues have been revisited with Boris’s pie-in-the-sky proposals, whether for Boris island, for a Foster monstrosity over the Isle of Grain, or even to look again at the Cliffe option that was so unambiguously rejected. Some newer issues have come to the fore. For instance, there is the London Array wind farm, and billions of pounds of investment have been put into a major liquefied natural gas terminal. There is the Richard Montgomery, a sunken vessel laden with high explosives, which this Government—unlike the previous one—tell us about, and provide reports on, to clarify the risk. Furthermore, issues of air traffic control have become even more significant than they were 10 years ago, partly because of the expansion of Schiphol airport over that period.

I note from the Parsons Brinckerhoff report mentioned by my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) that Richard Deakin, the chief executive of the National Air Traffic Services, said that the proposed site for the new airport was

“directly under the convergence of major arrival and departure flight paths for four of London's five airports.”

Pointing to the Thames estuary on a map, he said:

“The very worst spot you could put an airport is just about here…We’re a little surprised that none of the architects thought it worthwhile to have a little chat with the air traffic controllers.”

[Joseph Johnson (Orpington) (Con)]

I congratulate my hon. Friend on securing this debate, but I am a bit depressed by the combination of nimbyism and sticking-plaster solutions that he puts forward. Is he aware that the UK remains without any direct connection to 11 cities in mainland China that are expected to be among the 25 biggest cities in the world by 2025? Only a hub airport can deliver the sort of connectivity for which businesses in Orpington, and doubtless in my hon. Friend’s constituency, are crying out.

[Mark Reckless]

I encourage my hon. Friend to listen to the rest of my speech, and not merely to recycle briefings that I, too, have received. There are many arguments for a hub airport, and I do not deny that some are valid. Many, however, are recycled by industry players with strong vested interests that are not necessarily those of the country as a whole. However, I will address my hon. Friend’s point later in my remarks.

Finally, some estimates suggest that the cost of the proposal will be £40 billion, £50 billion or even £100 billion. The Parsons Brinckerhoff report, a substantive piece of work, argues that

“even the £70 billion being discussed is a conservative estimate.”

Boris tells us that that money will come from private investors. Yes, but they will want a return. Even if we are looking at a 5% interest rate over a 50-year period, a return on that sort of money will add at least £50 to the cost of every plane ticket from the airport. Why would airlines, passengers, the Government, indeed anyone, want to pay that sort of money when the cost of expanding existing airports—including some that Members present may be promoting—is so much smaller?

The coalition Government were right to reverse the policy that the previous Government decided on in 2003. To recap, the then Government’s recommendation was a second runway at Stansted by 2011-12, a third runway at Heathrow by 2015 to 2020 and, following our judicial review, a second runway at Gatwick from the mid-2020s. The strongest reason why we were right to overturn that is that the projections on which the Labour Government operated from 2003 were, as I and many others set out clearly at the time, wholly unrealistic. They were based on a low case of 400 million passenger movements for the UK by 2030, and a high case of 600 million.

[Kwasi Kwarteng (Spelthorne) (Con)]

I am listening with great attention and fascination to my hon. Friend’s speech, but he has not addressed a very pertinent point raised by my hon. Friend the Member for Orpington (Joseph Johnson): at present we do not have access, or cannot fly directly, to those cities in China. I know that my hon. Friend the Member for Rochester and Strood (Mark Reckless) will come to that in his speech, but I am conscious that it is probably one of the most important questions that he could address, and I would very much like to hear his thoughts on it.

[Mark Reckless]

In deference to my hon. Friend, I shall bring forward my remarks on that point.

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

Before my hon. Friend does so, will he say if he welcomes the fact that Heathrow delivers more flights to China than any of its continental rivals, meaning that we have excellent connectivity to important emerging markets such as China?

[Mark Reckless]

Yes, I hugely welcome that. From listening to the debate that is dominated by a small number of players with the strongest vested interests and the most public relations consultants, one would get almost the reverse impression. When we talk about flights to China, it is important to remember that the reason why we have relatively few different city destinations—that is separate from the overall number of flights, which the Minister was right to raise and I think is more important—is that it is for the convenience of British Airways, the dominant player at Heathrow, to use Hong Kong as a hub airport for China, in exactly the way that it uses Heathrow as a hub here, through the Oneworld alliance and Cathay Pacific.

[Joseph Johnson]

First, on a point of fact, according to BAA, London has only 31 flights a week to two destinations in mainland China, whereas there are 56 to three such cities from Paris Charles de Gaulle airport, and 51 to four such cities from Frankfurt. Furthermore, my hon. Friend references Hong Kong and Shanghai. Surely he is aware of the additional cost that comes from having to route products, goods and services through Shanghai and Hong Kong, as opposed to sending them directly to where the market is, in mainland China. Our businesses are crying out for connectivity. That is an obstacle.

[Mark Reckless]

I made no mention of Shanghai. The reason why there are only 31—

[Joseph Johnson]

Hong Kong is a transhipment point.

[Mark Reckless]

I mentioned Hong Kong, and the reason why Hong Kong is used so much is that that is hugely to the economic benefit of BA, Cathay Pacific and the Oneworld alliance. They use Hong Kong for exactly the same reasons why my hon. Friend promotes Heathrow—these great hub economics, which are certainly to the benefit of the airline providing a service. There are arguments for hub airports, but the arguments that my hon. Friend makes for point-to-point services to more cities are very strong ones. As for why we do not have them, I refer to a written answer from the Minister in March 2012. I do not know whether my hon. Friend the Member for Orpington (Joseph Johnson) has seen it. It states:

“China—restricted to six points in the UK and six points in China since 2004”—

according to a 2004 treaty—

“with a current limit of 31 passenger services per week by the airlines of each side allowed”.—[Official Report, 14 March 2012; Vol. 542, c. 239W.]

If my hon. Friend would like to see more flights to more Chinese cities, the way to do it is to rip up that treaty, and for the UK to move to a unilateral open-skies position that allows any Chinese airline to fly to any city in the UK.

[Kwasi Kwarteng]

I am trying to work through the maze of complicated arguments that my hon. Friend is presenting, but I have just a simple question. Does he believe that the United Kingdom as a whole needs more aviation capacity?

[Mark Reckless]

Yes.

[Tracey Crouch]

There is an argument about competitiveness, and that argument is for today. Our colleagues are arguing that businesses in their constituencies require the opportunities now. Therefore we should be making the most of our existing airports, rather than waiting two decades for a new airport to be built to maximise opportunities.

[Mark Reckless]

I agree. There is huge scope for what my hon. Friend describes. It would hugely benefit not just the Medway towns and the south-east region, but the country as a whole.

I want to talk about one other area where the lobbyists have a certain position. I received a document yesterday from the Mayor of London, who tells me that he is delighted that I am having this debate. He says:

“France’s hub airport, Paris Charles de Gaulle (56 departures per week), has better connections to Brazil than Heathrow (27 departures per week).”

The reason is that we have a bilateral treaty with Brazil, with a current limit of 35 passenger services a week between the two countries. Again, that is vastly to the benefit of BA, which routes flights to Latin America, including Brazil in particular, through the joint hub that it now has in Madrid, through Iberia following the merger. We do not get pressure from BA to change that, because it hugely benefits its profits, but BA’s market capitalisation is in the low billions. The idea that our whole airline policy and the network of treaties negotiated by the previous Government should restrict those flights and prevent Brazilian or Chinese airlines from flying into our large cities is a huge mistake.

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

Even if we were to rip up every treaty that my hon. Friend has identified as a block, does he seriously believe that there is sufficient capacity at our hub airport? Will a hub airport alone sustain newly developing point-to-point routes? Does he seriously argue that Heathrow could suddenly accommodate more routes to developing countries?

[Mark Reckless]

Yes, I do argue that. The limit on Heathrow’s routes to developing countries is largely because of the fact that those who have the slots find it most profitable to put on vast numbers of flights to New York and almost as large numbers to Hong Kong. It would benefit the country as a whole much more if there were a wider network of routes, rather than just what happens to benefit British Airways and maximise its profits. To get to what my hon. Friend suggests, the treaty we need to rip up is the treaty of Rome, because it is under European directives—[Interruption.] The reason why the slots are organised as they are is that they have been capitalised into property rights for the airlines that historically happen to have used them, and it is because of European legislation that that has been allowed to happen. If we want a more effective route network for our country as a whole, within the existing constraints of Heathrow—of course, others will argue that it needs to be bigger or we need a hub somewhere else and so on—European legislation prevents us from having that. Anyone who wants to set up a marginal route to an emerging market needs to buy out, at vast expense, one of the existing airlines, particularly BA, which has a near monopoly power. They have to give BA a huge amount of money to take the slots they need for those routes. The reason why they cannot do that is cost, yet we have treaties that restrict the amount of access that overseas airlines have into the UK. They could otherwise be flying into Gatwick, Stansted or Birmingham as city pairs, but the routes and slots are at Heathrow, and the regulation creates that monopoly power.

[Kwasi Kwarteng]

Is my hon. Friend seriously suggesting that the key to our aviation problems is ripping up the treaty of Rome?

[Mark Reckless]

It would certainly help. There are other ways in which the issue could be addressed; for instance, the air passenger duty regime. Many lobbyists are against the size of air passenger duty, but in operating conditions where there is an almost perfect monopoly at Heathrow and, at peak and to an extent shoulder periods, a monopoly at Gatwick, what happens through the increase in air passenger duty is that some of the monopolised value of those slots and the power of the grandfather rights are given instead to the public purse. It is not a situation of perfect competition in which costs are passed on. To the extent that costs rise, whether they are landing fees or APD, that will largely be absorbed into the price, giving greater public benefit, and possibly driving some of the marginal leisure stuff out of Heathrow and Gatwick.

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

Would the hon. Gentleman mind running past me again how the treaty of Rome is an obstacle to more liberal air service agreements with other countries? When I was aviation Minister, we signed agreements with a variety of countries to allow more liberalised flight access to both countries, and the treaty of Rome was not an obstacle then. Given Gatwick’s recent expansion into five new routes, the treaty does not seem to be an obstacle. How will tearing up the treaty of Rome solve our aviation competitiveness questions?

[Mark Reckless]

There are two problems: first, the treaty of Rome gives property rights in-slot to airlines that have traditionally had them, which prevents new airlines from coming in with marginal routes to new emerging market countries, due to the cost of buying out the monopolist. Only more and more fights to New York or Hong Kong make such routes work. Secondly, the previous Government protected the monopolistic BA with restrictive agreements that prevent Brazilian airlines from flying here, saying that there should be no more than 35 passenger services a week and allowing only 31 a week to China. If we want more flights to emerging markets, we should just let Brazilian and Chinese airlines fly to any UK airport they want, without insisting on reciprocal rights for BA. That is what is holding the country back; the interests of Britain are not the interests of BA.

The final section of my speech is about our other airports. In 2010, we rightly said no to an estuary airport and to extra runways at Gatwick, Stansted and Heathrow. That was the right policy for this Parliament. I do not know the Liberal Democrat position on when or if there should be future runway capacity in the south-east, but it is right that the Conservatives at least look at the case for new runways as and when demand requires. A lot can be done with existing capacity. Gatwick is expanding strongly and setting up point-to-point routes in new emerging markets, which I welcome. That would be helped if Gatwick were allowed to invest in the A380 facilities by charging more and coming to its own arrangements with new airlines to build those facilities without existing suppliers having a veto. I would support greater deregulation of Gatwick in that regard.

I understand that the option now being promoted by the Mayor of London is Stansted. Since the previous White Paper and the Labour Government’s view, usage at Stansted has fallen off significantly and intercontinental flights there have stopped. The Mayor says that we should expand Crossrail to Stansted, and I am keen to discuss that. He may have ideas that I have not appreciated fully, and that are certainly a lot more constructive than his pie in the sky proposals for a Thames estuary airport.

[Dr Julian Huppert (Cambridge) (LD)]

I congratulate the hon. Gentleman on securing the debate. When I spoke to those at Stansted recently, they made it clear that, given that the airport was at only 50% capacity, they want no more discussion of a second runway—that just messes up their relationship with the local community. Stansted wants a better rail service. I hope that he will support that.

[Mark Reckless]

That is certainly the position in the short-term. I am keen to see better surface travel into Gatwick. The deterioration in the train service there is most unfortunate. Investment is strongly in the national interest.

The British Chambers of Commerce initially proposed a “Heathwick” arrangement. There are some issues with the economics of it, but the existing system is the reason why it could be attractive. If we allowed Gatwick to invest £5 billion in a super-fast railway to Heathrow—by the way, BA, it would take 15 minutes airside, rather than an hour to connect them—it would be regulated capital and would lead to higher slot prices at Gatwick, which is a good thing anyway. Our problem with aviation in this country has been that we have held down the cost of landing fees at Heathrow and Gatwick, which means that they are operating at near capacity with all the problems mentioned. If we allowed landing fees to rise and entirely deregulated Gatwick and Heathrow, there would be a big transfer of economic value from the airlines to BAA.

Another way to do it would be differential APD, particularly on short-haul flights at Heathrow. Because we could get the cost back from higher landing charges at Gatwick, Heathwick, although not ideal, might make sense within the existing system; it would press out some of the leisure point-to-point flights from Gatwick and allow intercontinental flights to come there.

From Heathrow’s promoters, we hear that it is a great hub, that we need just one hub and that Paris Charles de Gaulle has more destinations than us, but those destinations are in French west Africa—Mali, Bangoui and Ouagadougou. I do not think that there is any suggestion that that should happen from Heathrow. Most demand is leisure, not business. Heathrow still flies more people and planes than other airports, even those with four or six runways.

We do not necessarily need a hub that is ideal for those who happen to operate that hub. There is a suggestion that a dual-hub is not ideal. That is true, but it is an awful lot better than no expansion and forcing more and more people to use European airports. According to the constrained Department for Transport forecast, which I find questionable in a number of ways, if we do not allow expansion in the south-east, 25 million rather than 4 million people will fly from Belfast by 2050 and 12 million people rather than 700,000 will fly from Exeter by 2030.

I question the plausibility of those forecasts, but if we deregulate air travel and allow a second runway at Gatwick in due course, after the agreement runs out in 2019—I agree with the hon. Member for Cambridge (Dr Huppert) that it should not be immediately—it will make it more attractive for the airline to expand in the airport. At some point, the Liberal Democrats may think that we will need at least one runway in the south-east. The strongest demand from the vested interests is for that to be at Heathrow, but there is a strong argument for the country as a whole for it to be at Gatwick. It would benefit from being there because we would then have competing hubs, with potentially another airline alliance based at Gatwick. It would drive down prices, serve more destinations and operate for the benefit of UK consumers as a whole, rather than just those who happen to have the strongest vested interests and shout loudest in current consultations.

[Nigel Mills (Amber Valley) (Con)]

I congratulate my hon. Friend on securing the debate. If I may intrude on the London and south-east grief with a question about the midlands, what are his views on encouraging passengers from the midlands and further north not to go to Gatwick or Heathrow for their leisure flights, but to use the airport they are driving past? Does he support the idea of a congestion charge around London to make regional airports more competitive?

[Mark Reckless]

Higher APD on short-haul flights from Gatwick and particularly Heathrow could allow airports beyond the south-east to compete for marginal business that might make more sense at those airports, particularly the leisure flights of people based in the midlands and the north who are flying point to point. Similarly, if we deregulated our international air agreements, there would be a better chance that intercontinental networks would base themselves at Birmingham airport, for example, which now has a longer runway.

[Julian Sturdy (York Outer) (Con)]

My hon. Friend makes a powerful case. An argument is that regional airports across the country will take up some of the slack. My airport, Leeds Bradford, has invested heavily—£11 million—in expansion and has new links to Heathrow. Is it not the case that despite the important role that regional airports play across the country, they will not lessen the need for expansion in the south-east and London? Ultimately, people want to fly into the capital city of a country and we cannot get away from that fact.

[Mark Reckless]

Yes, I think that is right. My argument is that it is entirely conceivable to have two hubs. Heathrow currently has many more passengers and planes using it than most of the other supposed competing hubs. The problem is that the slot prices are very high and profits are being maximised by those who, under EU law, own the property rights in those slots. If instead we allow a second hub, and Gatwick is the more attractive and conceivable hub to develop, and both operate in that way, competing airlines would drive down prices and give many more links to emerging markets, rather than very thick routes to New York and Hong Kong. That is my view, but perhaps the Mayor of London has considered matters that I have not. Stansted, and potentially regional airports—Southend and, I am delighted to see, Luton are developing in this way—could take many more point-to-point leisure flights, rather than them flying from Gatwick, or even Heathrow. Why does Heathrow have so many flights to Orlando? Why does it have flights to Malaga or Larnaca?

There is a very strong case for Gatwick. Many regional airports can help with the load. The debate that we have been having about aviation has been horribly distorted by what I am afraid are preposterous efforts by the Mayor of London to put the Thames estuary airport on the agenda, 10 years after it was categorically ruled out, and by the issue of Heathrow. Very strong vested interests want expansion at Heathrow. There are some economic arguments for the country as a whole for expansion there. However, there are costs, in terms of those living under the flight path, and in terms of our political promises; and the value of politicians sticking to what they promise is strong.

As to what the Transport Secretary says, and the argument that “It is all very well talking about a third runway at Heathrow, and mixed mode, but what is the next step?” it is incumbent on those who want expansion at Heathrow to say what happens in 30, 50 or more years. The reason the Secretary of State does not get the answers is that those with a vested interest at Heathrow—BAA and British Airways—do not want unlimited expansion there. It would undermine their monopoly position. The idea of going for mixed mode is attractive to BA—not necessarily to BAA, because it does not get the higher regulated capital. A third runway allowing marginal expansion of perhaps another 20 million passengers is attractive, because it maintains the value of the slots but allows them to develop. My hon. Friend the Member for Spelthorne (Kwasi Kwarteng) may want to discuss the fact that if we want Heathrow to be a mega-hub, perhaps remaining the biggest in the world and taking on Dubai as well as competitors in Europe—there are strong arguments against that, particularly from the point of view of people who live in the area, and the environment—it could mean taking over RAF Northolt and putting in several runways linked into Heathrow, as a long-term single giant hub solution.

Despite arguments that two hubs are not ideal, that is a far better solution than complete constraint on any expansion, or only looking after the interests of Heathrow. If we were to see the Oneworld alliance at Gatwick— short-term expansion is being done very well at the moment, and there could be longer-term expansion, but only once the 2019 agreement runs out—it would be a much more sensible way forward. There is a basket of other options, all of which make more sense than harking back to the preposterous estuary airport proposal, or looking at UK aviation solely through the issue of a third runway at Heathrow.

[Several hon. Members]

rose—

--- Later in debate ---

[Graham Stringer (Blackley and Broughton) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Dobbin, for what I think is the first time.

I congratulate the hon. Member for Rochester and Strood (Mark Reckless) on obtaining this important debate on the different issues relating to competition in the aviation industry. I agree with many of the points he made, and it is worth exploring further the points with which I disagree. He is serious about trying to find a solution to the country’s aviation policies, and that is worth discussing. Judging by the expressions of everyone taking part in the debate, there is agreement that Boris island is a complete non-starter. It is a decoy duck, Potemkin village, a red herring, or, as the previous Labour Secretary of State said, bonkers; it will not happen. But it is part of the illusions around aviation policy—which are the basis not of what the hon. Gentleman has been saying but of the Government’s policy—that somehow we do not know what has been happening in aviation, and there is more information to be found out. That simply is not true.

Going back to the Roskill commission in 1969 and a series of other White Papers and investigations, more is known about aviation policy in the south-east of England than about possibly any other area. If we want to be competitive, there must be more airport capacity in the south-east. Otherwise, the decline and damage that lack of aviation is causing to the economy will continue. I do not agree with the hon. Gentleman that it is right to suspend any discussion for the length of the Parliament. It might be right for the coalition agreement, but it is not right for the economy.

[Mark Reckless]

Will the hon. Gentleman give way?

[Graham Stringer]

I will in a moment, but I want to go through some of the points that the hon. Gentleman made.

I do not think the “Heathwick” proposal works in detail. When I give way to the hon. Gentleman I want him to tell me about any city in the world—Toronto, Washington, Glasgow—that has tried having two airports. There are examples all round the world of countries saying “We will have an intercontinental airport here and a domestic one there,” and finding that neither of those airports has worked. Off the top of my head, I cannot think of a city with two competing hubs. The nature of hubs, and what makes them valuable—both for countries and airlines—is that airlines from all over the world go into them, with great interconnectivity. The idea of competing hubs is a contradiction in terms, and there is no real evidence that having two adjoining airports works.

[Mark Reckless]

I am delighted to have some discussion of the issue in the current Parliament, and I look forward to hearing from the Minister what decisions may be made about how that discussion should happen. I just do not think we should build any new runways during this Parliament.

I disagree about dual hubs. Perhaps the idea has been tried in, say, Tokyo and one or two other places and has not been ideal, but we are not making a comparison with the ideal; we are making a comparison with the constrained capacity possibility that 14 million people might try to fly from Exeter. Expanding Gatwick, rather than restricting it, will not result in the perfect economic hub airport, but hubs give declining returns, to scale, to the extent that they get bigger and bigger. If we allow flights to new emerging markets and competing hubs operating in the competitive interest of the country, rather than one hub operating in the interest of the monopolist based there, that would be a significantly better airline policy than the one we have.

[Graham Stringer]

All I would say is that the proposition has not worked. We are in decline and we need extra runways in the south-east. Only one new runway has been built in this country since the second world war. Heathrow was, I think, originally planned to have 12 runways, albeit in a different configuration. The hon. Gentleman can look at the history books if he wants to.

The hon. Gentleman’s argument relies on two issues: first, that our connections to China, as the Minister of State said, mean that we are not really suffering; and secondly, that slots are too cheap at Heathrow, and if we freed up that market we would help the economy as a whole. Let me give some evidence.

The Frontier Economics report, “Connecting for Growth”, which was produced in 2011, showed that trade is 20 times higher where there are direct flights to cities in China. It estimates that the UK is missing out as trade goes to France, Germany and Holland, and quantifies the cost to the UK economy of a lack of connections as £1.2 billion a year. Taking that present value over 10 years, that amounts to £14 billion. Paris and Frankfurt boast 1,000 more annual flights to the three largest Chinese cities, Beijing, Chongqing and Guangzhou, than we get from this country. The Minister of State is right to say that we send a large number of flights to Hong Kong, and that there is hubbing in the Oneworld alliance at Hong Kong. The City of London is doing quite a lot of damage at the moment, but if we consider some of the effects, and the latest financial centres index, the Hong Kong index has gone up by 21 and London has gone down by three. There is a correlation, if not a direct one, between the hubbing that is going on there and the damage that is being done to the UK economy. Forbes Magazine has shifted the UK down from sixth best country in the world in which to do business to 10th best. One contributing factor is our connections with other countries.

--- Later in debate ---

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

I congratulate my hon. Friend the Member for Rochester and Strood (Mark Reckless) on securing the debate, which has been excellent; there have been many very useful contributions. There is no doubt that the UK has a highly successful aviation sector, and I pay tribute to the energy and enterprise that we see from that industry, in the face of challenges as tough as the global slow-down and, of course, rising world oil prices. Developments over the past 20 years, such as the introduction of low-cost, no-frills airlines, have provided real passenger benefits and unprecedented choice and opportunity to fly.

In the year of the Olympics and the diamond jubilee, we are reminded once again of aviation’s critical role as the route to bringing in tourism. However, the very success of our aviation industry presents us with a key challenge: how do we accommodate growth and seize the benefits generated by aviation while meeting our environmental commitments and addressing the quality-of-life impact of aircraft noise?

It is very clear that London is one of the best-connected cities in the world, with its five busy and successful airports—six, if newly expanded Southend is included. Together, those five airports provide direct links to around 360 international destinations, including virtually all the world’s great commercial centres. That compares with just 309 such links from Paris, and 250 from Frankfurt. Heathrow provides more flights to New York than Paris and Frankfurt put together, and has more flights to the crucial BRIC—Brazil, Russia, India and China—economies than other European hubs, including more services to China.

Airlines are launching new routes to key emerging-market destinations. BA has recently announced a new service to Seoul. China Southern Airlines now flies from Heathrow to Guangzhou. Gatwick has a new Air China service to Beijing, and the aviation industry continues to invest and innovate. Birmingham airport will shortly begin constructing a runway extension better to enable it to serve long-haul destinations. The operators of Heathrow and Gatwick are investing £5 billion and £1 billion respectively over the next few years in better infrastructure. Of course, it is important to press for the further liberalisation of aviation, in terms of opening up the opportunity for UK airlines to provide flights to more destinations—something called for by my hon. Friend the Member for Rochester and Strood.

[Mark Reckless]

Why does it need to be UK airlines? Surely the benefit for the UK is to have airlines—Brazilian or Chinese as much as UK ones?